KeNo's Housing and Economic Portal: Wednesday May 12 Housing and Economic stories

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TOP STORIES:

South Florida's condo crisis: Prices at seven-year lows - (www.palmbeachpost.com) Sheila Ryan paid dearly for her front-row seat to the boom and bust of South Florida's condo market. She put down $239,900 in 2006 for what she thought was a gem, a one-bedroom condo near downtown Fort Lauderdale. Little did she know that would be the peak of the condo market. Over the next two years, investor-owners walked away from nearly half of the 20 units in her complex. Taxes went up and condo association fees rose to $350 from $180 a month for the owners who remained. As Ryan paid more, the recession cut into her income as a massage therapist. "I remember being at a homeowners meeting and actually shaking because I knew I wasn't going to be able to turn it around," she recalled. Now in foreclosure, Ryan is trying to sell her condo for a quarter of what she paid: "It's all out of control, and you just want peace of mind again."

National foreclosure rates rise to highest quarterly total ever - (www.newjerseynewsroom.com) Resisting calls to provide more leeway to borrowers, banks sharply increased foreclosure filings in the first three months of the year. The latest data from RealtyTrac showed 932,234 properties – one in every 138 American housing units – were hit with default notices, scheduled auctions or bank repossessions during the three months ending in March. The numbers are up 7 percent from the previous quarter, and 16 percent higher than a year ago, according to the Irvine, Calif., company. Besides being higher, the latest activity is "more tilted toward the final stage of foreclosure," said James J. Saccacio, RealtyTrac's chief executive officer. The 257,944 repossessions are "the highest quarterly total we've ever seen," he said. The figure means the United States is on pace for more than 1 million bank repossessions this year, he said. In Saccacio's view, that indicates, "lenders are starting to make a dent in the backlog of distressed inventory that has built up over the past year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline." Indeed, the repossessions exceeded the 231,000 household reported by the U.S. Department of the Treasury to have completed mortgage modifications under its foreclosure prevention program. About 1.2 million borrowers have applied to the program since it was launched in March 2009, but about 158,000 have dropped up. Testifying before the House Financial Services Committee this week, to executives of JPMorgan Chase and Wells Fargo challenged the idea of reducing mortgage balances for struggling homeowners. "Principal forgiveness is not an across-the-board solution," said Mike Heid, co-president of Wells Fargo Home Mortgage.

Supreme Court rejects Schwarzenegger furlough consolidation - (www.sacbee.com) Yes, the state is screwed up. Almost every assumption California used last year to balance its budget has been overturned or overruled. The California Supreme Court has rejected Gov. Arnold Schwarzenegger's request that it take up seven key furlough lawsuits now in two appellate courts and freeze more than a dozen others in trial courts around the state. The decision ends the possibility for a relatively quick resolution to about two dozen furlough lawsuits in courts around the state. The court posted the decision on its website this morning: "The application to transfer and consolidate appeals now pending in the Court of Appeal to this court is denied." Justice Joyce Kennard dissented. Schwarzenegger is embroiled in 25 active lawsuits in various stages of litigation in courts from Sacramento to Los Angeles. On Mar. 2, his attorneys asked the state's high court to consolidate and review seven cases related to the governor's furlough authority, including a three Alameda Superior Court decisions on "special fund" workers that the administration lost and has appealed.

Greek Two-Year Note Yields Jump Over 11% Amid Repayment Concern - (www.bloomberg.com) Greek bonds plunged, driving two- year yields above 11 percent, after the European Union said the nation’s 2009 budget deficit was larger than previously stated and Moody’s Investors Service cut its credit rating one step. The cost of insuring against default soared, rising above Ukraine and putting it closer to Argentina and Venezuela. Ten- year bonds slid for an eighth day, sending the yield to more than 9 percent. The EU’s statistics office said today that Greece’s deficit was 13.6 percent of gross domestic product last year. Greek officials are holding a second day of talks today with the European Commission and International Monetary Fund. Moody’s lowered the rating to A3 from A2. “The market recognizes that Greece can’t get out of this on its own and it’s a question of whether it’s the bondholders that get a haircut or the other euro-area states that pay the bill, or a combination of the two,” said Paul Lambert, head of the global macro team at Polar Capital Holdings Plc in London.

Just in time for spring, next wave of foreclosure crisis gets rolling - (www.boston.com) It's both a nationwide trend and a local one as well - the Massachusetts numbers are actually worse in some respects. If nothing else, it means more homes will be hitting the market just as the home buyer tax credit expires on April 30. The first three months of the year saw more than 7,000 homes and condos across the state either get scheduled for a foreclosure auction or bought back by the bank at auction. Given there are 30,000 or so homes on the market in the state, this could be significant. Bay State foreclosure activity - everything from initial notices to final auctions - jumped 12 percent in the first quarter over the fourth quarter of last year. And compared to the first three months of 2009, foreclosure activity is up by a stunning 60 percent! That's compared to still record breaking increases nationally of 7 percent in the first quarter over the fourth and 16 percent year-over-year. A couple factors are driving this trend, including, ironically, increasingly healthy bank bottom lines at banks.

The State Worker: Bill would roll back pension benefits for new hires - (www.sacbee.com) The fight over state worker retirement benefits was fully joined Wednesday. Gov. Arnold Schwarzenegger and Senate Republican leader Dennis Hollingsworth announced a bill that would roll back retirement benefits for new state hires. Here's a sketch of Senate Bill 919:

• Age. The vast majority of state workers can retire now at 62. The bill would increase that age to 65 for new hires. CHP officers, firefighters, correctional officers and other peace officers would have to wait until 57, up from the current retirement age of 50.

• Percentage formulas. Police, safety officers and firefighters currently get 3 percent of their single highest year, with a pension cap at 90 percent of their highest annual wage. SB 919 would cut that to 2.7 percent.